Dismissal for Forum Non, With Two Alternative Fora?

The Fourth Circuit recently considered whether dismissal for forum non conveniens is appropriate if the case would have to be bifurcated and heard in two separate courts in the country that provides an alternative forum.  In AdvanFort Co. v. Zamil Offshore Services Co., the court answered “yes,” with one judge dissenting. This might have been a good case in which to rule on personal jurisdiction before resolving the question of forum non conveniens.

Background

AdvanFort, a Virginia company, provides maritime security to protect oil tankers from piracy in international waters.  One of its vessels was damaged by a fire that broke out while the vessel was docked in Saudi Arabia for maintenance at Zamil Offshore Services Company (“Zamil”). Zamil leases space from the Saudi Ports Authority (“Ports Authority”), a Saudi government entity.  AdvanFort sued Zamil in Saudi Arabia and lost.  Zamil then transferred the boat to storage and allegedly stripped it of valuable components and failed to store it property.  To recover damages for these alleged wrongs, AdvanFort sued both Zamil and the Ports Authority, this time in the Eastern District of Virginia. The Ports Authority defaulted. Zamil moved to dismiss for forum non conveniens.

 The Adequacy and Convenience of Saudi Courts

AdvanFort argued to both the district and appellate courts that Saudi Arabian courts do not provide an adequate alternative forum because they are neither independent nor impartial. These are standard arguments to defeat motions to dismiss for forum non conveniens, and they put judges in the awkward position of evaluating the merits of foreign judicial systems about which they know little. AdvanFort also relied on standard evidence to support its arguments:  publicly available documents and an expert witness who opined that lawyers and witnesses who support lawsuits against the Saudi government face unfair treatment and various kinds of retribution including torture. The district court found these assertions too general. It also found no evidence of problems in the suit that Advanfort had previously brought against Zamil.

Although a U.S. plaintiff like AdvanFort generally enjoys a presumption in favor of its choice of forum, that presumption was “partially discounted” in this case because AdvanFort elected to do business abroad in Saudi Arabia.  After the defendants have identified an adequate alternative forum and the presumptions have been considered, the touchstone of the forum non conveniens analysis becomes convenience.  In this case, the district court reasoned that both public and private interests weighed in favor of dismissal. In terms of private interests, physical evidence and witnesses needed to testify were located in Saudi Arabia, and the litigation would likely involve third-party witnesses who could not be compelled to testify in Virginia. In terms of public factors, Virginia had little interest in the resolution of the dispute, which took place in Saudi Arabia and to which Saudi law would apply under Virginia choice of law rules.  The court of appeals agreed with the district court’s reasoning with respect to both the adequacy and the convenience of the alternative forum, applying an abuse of discretion standard of review.

Two Alternative Fora?

The most interesting part of the case – and the issue that drew a dissent – was whether an alternative forum is adequate if it requires the plaintiff to sue the defendants in two separate courts.  In this case, both Zamil and the Ports Authority could at least in theory be sued in Virginia, although Zamil raised a personal jurisdiction defense that the court did not resolve.  The Ports Authority defaulted, so we do not know whether it might have successfully contested jurisdiction. What we do know is that in Saudi Arabia, the plaintiffs will have to sue the two defendants in two different tribunals in the same city. The Ports Authority can only be sued before an administrative tribunal, whereas the case against Zamil will have to brought in a standard commercial court. The need to sue the defendants in separate fora in Saudi Arabia is significantly less convenient for the plaintiff, although not as inconvenient as the need to litigate in two different counties would be.

Having to litigate in two Saudi fora also creates a risk of inconsistent judgments.  Concern with inconsistent judgments in the courts of two different countries has long been an important part of forum non conveniens analysis. For example, in Piper Aircraft Co. v. Reyno, dismissal was appropriate in part because not all of the potential defendants could be joined in the U.S. litigation, but they could all be sued in Scotland.  Denying the motion to dismiss risked the possibility that U.S. courts and Scottish courts could reach conflicting judgments about the cause of an airline crash in Scotland.  The dissenting judge saw a similar risk in this case, because the administrative tribunal and the commercial court might issue inconsistent judgments.  The majority opinion did not address the issue of inconsistent judgments, and the dissent’s point is a good one.

Conclusion

In many cases, there is a lot of overlap between choice of law, personal jurisdiction, and forum non conveniens.  In cases against sovereign entities such as the Ports Authority, it is the Foreign Sovereign Immunities Act that confers personal jurisdiction.  Even if the defendant defaults, the courts must satisfy themselves that an exception to immunity applies before entering judgment.

In my view, it might be preferable, for policy reasons, to resolve the personal jurisdiction questions first. If there is no personal jurisdiction, then the forum non conveniens analysis is unnecessary. The case must go to Saudi Arabia, whether there is one forum or two. If there is personal jurisdiction over the Ports Authority, however, that means that under the rules that Congress adopted, the connections between the defendant and the United States are strong enough to warrant having the suit go forward in the United States. To be sure, the Supreme Court has held that district courts may dismiss for forum non conveniens even before resolving subject matter or personal jurisdiction questions, which is what the district court did here.  District courts are not required to resolve the forum non conveniens issue first, however, and in this case the answer to the personal jurisdiction question might have resolved the case in a better way.